La Homes - What To Offer

When thinking about making an offer on a home, do not rely on your real estate agent to determine the offer price. This is your own deal and a lot of money is at stake. Many buyers make the mistake on relying on other people to make their financial decisions for them. In the Los Angeles real estate marketplace, home prices are high and competition is tough. This is the time for the home buyer to do their own due-diligence in order to figure out the best offer price. A real estate agent can help you in the process, but only accept advice from them rather than a firm number.

It is critical to gather detailed data prior to making that offer. Your real estate agent will offer to give you comparables in the area. This is extremely important information for the buyer to see what other houses have sold for. Be careful about using data more than six months old, due to the Los Angeles real estate market changing rapidly. A house that sold for $450,000 nine months ago may only sell for $400,000 today. Home values change from month to month and even from season to season. Homes typically cost more in the spring/summer time frame, due to more competition from buyers in the nice weather months.

Once a house is selected, it would be wise to attempt to figure out why the seller has put their house on the market. Unfortunately in the Los Angeles home market, many houses are sold due to financial hardship. The seller may have lost their job or had their business go under. These type of scenarios create a situation where the sellers need to sell their house in a rapid manner, thus freeing up their finances. If a house is in this situation, a buyer may reap the benefits of getting a bargain. Sometimes the listing agent may not be able to tell you this information, since it is private information they have been instructed not to release. The buyer may be able to get a "feeling" for this though, and use it to make a lower offer. If on the other hand a seller appears to have no financial difficulties and may be selling to move into a different area, it's undetermined what type of offer the seller may accept. There may not be a time period required for the sale to take place, thus not creating a need to sell quickly.

The temperature of the real estate marketplace is key to determining the offer to be made. If the sellers are receiving multiple offers, it would be wise to offer close to or equal to the listing price. The buyers offer needs to be attractive to win acceptance by the seller. Typically Los Angeles home prices heat up in the springtime, thus causing offers to be closer the selling price. If at all possible, it might be wise to make an offer on a home in the winter months. This is the time most Angelinos prefer to be home and not out on a house hunting expedition. Lower prices are common at this time, thus the offer will be much lower also.

Los Angeles prices fluctuate quite a bit compared to other large cities. The price the current seller paid for the house in the past is an important fact to determine. Although the price may have no bearing on today's market, if there has been no appreciation since the buyer purchased the home, it might be a good idea to make an offer that is somewhat close to the seller's purchase price. The seller has most likely priced their home to get out without taking too much of a financial hit. If on the other hand the seller purchased their home years and years ago, there may be no bearing at all on what the offer might be. Additionally, it would be interesting to find out what kind of money the seller has put into the home for remodeling. If a seller bought a "fixer-upper" and put a lot of work into the home, the offer may be adjusted higher due to the remodeling improvements.

The Seller's mortgage balance is crucial in making an offer. If the seller's mortgage amount is high and the property is vacant, this seller is most likely making mortgage payments out of their own pocket. This "needing to sell" environment is a buyer's dream. The offer may be a little lower, since the seller would like to stop making payments on a house they don't even live in. Most likely, they are either paying rent on another house or have somehow obtained a new mortgage on another. Either way, the seller would like to stop paying this mortgage. On the other side, if the seller's mortgage is low, they might not be motivated to sell quickly and may be waiting for that "attractive" offer.

An offer is the first step to owing a home, have fun with the process. If an offer isn't accepted, there is always another house that can be found.